NLIGHT, INC.

Previous wording

nLIGHT, Inc., headquartered in Camas, Washington, is a leading provider of high-power lasers for mission critical directed energy, optical sensing, and advanced manufacturing applications.

Current wording

nLIGHT, Inc. is a leading provider of high‑power lasers for mission-critical directed energy, optical sensing, and advanced manufacturing applications. We design, develop, manufacture, integrate and sell a range of high-power semiconductor lasers and fiber lasers and related components, modules and subsystems that are typically integrated into laser systems or manufacturing tools built by us or our customers. We also make high energy pulsed fiber lasers, fiber amplifiers, and beam combination and control systems for use in high-energy laser systems for directed energy and laser sensing systems for use in a wide range of commercial and defense applications. Our long history of commercial technology development and vertical integration enables us to develop products that leverage the same underlying technology across a variety of applications and markets, thereby enabling us to leverage the development of shared technologies in unique combinations to offer innovative and reliable products to customers in each of our end markets. We sell our products into three primary end markets: Aerospace and Defense, Industrial, and Microfabrication.

Previous wording

Revenues increased to $180.1 million in the nine months ended September 30, 2025 compared to $151.2 million in the same period in 2024 due primarily to an increase in both product and development revenue from the Aerospace and Defense end market. We generated a net loss of $18.6 million for the nine months ended September 30, 2025 compared to a net loss of $35.8 million for the same period in 2024.

Current wording

Revenues increased to $80.2 million in the three months ended March 31, 2026 compared to $51.7 million in the same period in 2025 due primarily to an increase in both product and development revenue from the Aerospace and

Previous wording

Demand for our products also fluctuates based on market cycles, continuously evolving industry supply chains, trade and tariff terms, as well as evolving competitive dynamics in each of our end-markets. Erosion of average selling prices, or ASPs, of established products is typical in our industry, and the ASPs of our products generally decrease as our products mature. We may also negotiate discounted selling prices from time to time with certain customers that purchase higher volumes, or to penetrate new markets or applications.

Current wording

Demand for our products also fluctuates based on market cycles, continuously evolving industry supply chains, trade and tariff terms, as well as evolving competitive dynamics in each of our end-markets. Erosion of ASPs of established products is typical in our industry, and the ASPs of our products generally decrease as our products mature. We may also negotiate discounted selling prices from time to time with certain customers that purchase higher volumes, or to penetrate new markets or applications.

Previous wording

We invest heavily in research and development to provide solutions to our current and future customers, and anticipate that we will continue to invest in research and development to achieve our technology and product roadmap. Our product development is targeted to specific sectors of the market where we believe the performance of our products provides a significant benefit to our customers. We believe our close coordination with our customers regarding their future product requirements enhances the efficiency of our research and development expenditures.

Current wording

We invest heavily in the development of our semiconductor, fiber laser, directed energy, and laser-sensing technologies to provide solutions to our current and future customers. We anticipate that we will continue to invest in research and development to achieve our technology and product roadmap. Our product development is targeted to specific sectors of the market where we believe the performance of our products provides a significant benefit to our customers. We believe our close coordination with our customers regarding their future product requirements enhances the efficiency of our research and development expenditures.

Previous wording

The increases in revenue from the Aerospace and Defense market for the three and nine months ended September 30, 2025, compared to the same periods in 2024, were driven primarily by increased unit sales of directed energy laser products and progress on existing research and development contracts. The decreases in revenue from the Industrial market for the three and nine months ended September 30, 2025, compared to the same periods in 2024, were primarily the result of decreased unit sales due to lower customer demand and deteriorating market conditions across all regions. The decreases in revenue from the Microfabrication market for the three and nine months ended September 30, 2025 compared to the same periods in 2024 were primarily attributable to a decrease in unit sales of semiconductor lasers.

Current wording

The increase in revenue from the Aerospace and Defense market for the three months ended March 31, 2026 compared to the same period in 2025 was driven by increased unit sales of directed energy laser products across all regions and progress on existing development contracts. The increase in revenue from the Microfabrication market for the three months ended March 31, 2026 compared to the same period in 2025 was primarily attributable to increased unit sales of semiconductor lasers in all regions. The increase in revenue from the Industrial markets for the three months ended March 31, 2026 compared to the same period in 2025 was the result of increased unit sales of additive fiber lasers in North America, partially offset by decreased unit sales of other industrial laser products.

Previous wording

The increases in Laser Products revenue for the three and nine months ended September 30, 2025 compared to the same periods in 2024 were the result of increased revenue from the Aerospace and Defense market as discussed above, partially offset by decreases in revenue from the Industrial and the Microfabrication markets. The increases in Advanced Development revenue for the three and nine months ended September 30, 2025, compared to the same periods in 2024, were driven by progress on existing research and development contracts. All Advanced Development revenue is included in the Aerospace and Defense market.

Current wording

The increase in Laser Products revenue for the three months ended March 31, 2026 compared to the same period in 2025 was the result of increased units sales across all end markets. The increase in Advanced Development revenue for the three months ended March 31, 2026 compared to the same period in 2025 was driven by progress on existing research and development contracts. All Advanced Development revenue is included in the Aerospace and Defense market.

Previous wording

Geographic revenue information is based on the location to which we ship our products. The increases in North America revenue for the three and nine months ended September 30, 2025 compared to the same periods in 2024, were due to increased revenue from the Aerospace and Defense market, partially offset by decreased revenue from the Industrial and Microfabrication markets. The decreases in Asia Pacific revenue for the three and nine months ended September 30, 2025 compared to the same periods in 2024 were the result of decreased revenue from the Industrial and Microfabrication markets, which was partially offset by increased revenue from the Aerospace and Defense market. The increases in EMEA revenue for the three and nine months ended September 30, 2025 compared to the same periods in 2024 were primarily due to increased revenue from the Microfabrication market and Aerospace and Defense market, partially offset by decreased revenue from the Industrial market.

Current wording

Geographic revenue information is based on the location to which we ship our products. The increase in North America Revenue for the three months ended March 31, 2026 was due to increased revenue across all end markets, with revenue from the Aerospace and Defense market representing most of the increase. The increases in Asia Pacific and EMEA revenues for the three months ended March 31, 2026 compared to the same period in 2025 were the result of increased revenues from the Aerospace and Defense and Microfabrication markets, partially offset by decreased revenue from the Industrial market.

Previous wording

Cost of Laser Products revenue consists primarily of manufacturing materials, labor, shipping and handling costs, tariffs and manufacturing-related overhead. We order materials and supplies based on backlog and forecasted demand from our customers. We expense all warranty costs and inventory provisions as cost of revenues.

Current wording

Products cost of revenue consists primarily of manufacturing materials, labor, shipping and handling costs, duties, and manufacturing-related overhead. We order materials and supplies based on backlog and forecasted customer orders. We expense all warranty costs and inventory provisions as cost of revenues.

Previous wording

Cost of Advanced Development revenue consists of materials, labor, subcontracting costs, and an allocation of indirect costs including overhead and general and administrative.

Current wording

Development cost of revenue consists primarily of materials, labor, subcontracting costs, and an allocation of indirect costs including overhead and general and administrative.

Previous wording

The increase in Advanced Development gross margin for the nine-months ended September 30, 2025 compared to the same period in 2024 was primarily the result of an increase in revenue from fixed priced contracts that carried higher average gross margins than cost-plus fixed fee contracts. The decrease in Advanced Development gross margin for the three-months ended September 30, 2025 compared to the same period in 2024 is attributable to changes in the mix of research and development contracts as most of the revenue for the three months ended September 30, 2025 was from cost-plus fixed fee contracts.

Current wording

The increase in products gross margin for the three months ended March 31, 2026 compared to the same period in 2025 was driven primarily by sales mix and the impact of increased production volumes on fixed manufacturing costs due to the overall increase in sales. The decrease in development gross margin for the three months ended March 31, 2026 compared to the same period in 2025 was primarily the result of an increase in revenue from cost-plus fixed fee (CPFF) contracts relative to firm fixed price (FFP) contracts. CPFF contracts generally have a lower average gross margin than FFP contracts.

Previous wording

The increases in research and development expense for the three and nine months ended September 30, 2025 compared to the same periods in 2024 were primarily attributable to increases in incentive compensation and increases in stock-based compensation of $0.5 million and $0.3 million for the three and nine months ended September 30, 2025, respectively, partially offset by decreases in employee compensation due to reductions in headcount and decreases in outside services.

Current wording

The increase in research and development expense for the three months ended March 31, 2026 compared to the same period in 2025 was driven by an increase in stock-based compensation of $0.5 million, an increase in employee compensation due to an increase in headcount, partially offset by a decrease in project-related expenses.

Previous wording

The increases in sales, general and administrative expense for the three and nine months ended September 30, 2025, compared to the same periods in 2024, were driven primarily by increases in employee and incentive compensation, and increases in stock-based compensation of $2.3 million and $2.5 million, respectively, partially offset by decreases in bad debt expense, increases in bad debt recoveries, and a higher allocation of costs from sales, general and administrative to development projects.

Current wording

The increase in sales, general and administrative expense for the three months ended March 31, 2026 compared to the same period in 2025 was primarily due to an increase in stock-based compensation of $3.9 million and an increase in employee compensation, partially offset by a higher allocation of costs from sales, general and administrative to development projects, and decrease in bad debt recoveries.

Previous wording

The increases in interest income for the three and nine months ended September 30, 2025, compared to the same periods in 2024, were driven primarily by an increase in income earned from marketable securities and imputed interest on a long-term customer receivable.

Current wording

The decrease in interest income, for the three months ended March 31, 2026 compared to the same period in 2025 was driven primarily by a decrease in income earned from marketable securities, partially offset by an increase in income earned from cash equivalents.

Previous wording

The increases in interest expense for the three and nine months ended September 30, 2025, compared to the same periods in 2024, were driven by interest on the outstanding LOC balance. Interest expense on the line of credit (LOC) was $0.3 million and $0.8 million for the three and nine months ended September 30, 2025, respectively.

Current wording

The increase in interest (expense), for the three months ended March 31, 2026 compared to the same period in 2025 was driven primarily by an increase in interest expense on line of credit (LOC). Interest expense on the LOC for the three months ended March 31, 2025 was immaterial due to the timing of the draw.

Previous wording

Other income, net is primarily attributable to changes in net realized and unrealized foreign exchange transactions resulting from currency rate fluctuations. The prospective classification change for income earned from marketable securities referenced above is the primary factor contributing to the year-over-year variance for other income, net from the same period in 2024.

Current wording

Other income, net is primarily attributable to changes in net realized and unrealized foreign exchange transactions resulting from currency rate fluctuations.

Previous wording

We record income tax expense for taxes in our foreign jurisdictions including Finland, Italy, Austria, and South Korea. While our tax expense is largely dependent on the geographic mix of earnings related to our foreign operations, we also record tax expense for uncertain tax positions taken and associated penalties and interest. We consider all available evidence, both positive and negative, in assessing the extent to which a valuation allowance should be applied against our deferred tax assets. Due to the uncertainty with respect to their ultimate realizability, we continue to maintain a full valuation allowance on deferred tax assets in the United States, and a partial valuation allowance in China as of September 30, 2025. Our effective tax rate may vary from period to period based on changes in estimated taxable income or loss by jurisdiction, changes to the valuation allowance, changes to U.S. federal, state or foreign tax laws, future expansion into areas with varying country, state, and local income tax rates and deductibility of certain costs and expenses by jurisdiction.

Current wording

We record income tax expense for taxes in our foreign jurisdictions including Finland, Italy, Austria, China and South Korea. While our tax expense is largely dependent on the geographic mix of earnings related to our foreign operations, we also record tax expense for uncertain tax positions taken and associated penalties and interest. We consider all available evidence, both positive and negative, in assessing the extent to which a valuation allowance should be applied against our deferred tax assets. Due to the uncertainty with respect to their ultimate realizability, we continue to maintain a full valuation allowance on deferred tax assets in the United States, and a partial valuation allowance in China as of March 31, 2026. Our effective tax rate may vary from period to period based on changes in estimated taxable income or loss by jurisdiction, changes to the valuation allowance, changes to U.S. federal, state or foreign tax laws, future expansion into areas with varying country, state, and local income tax rates and deductibility of certain costs and expenses by jurisdiction.

Previous wording

We had cash and cash equivalents and restricted cash of $81.4 million and $66.1 million as of September 30, 2025 and December 31, 2024, respectively. In addition, we had marketable securities of $34.7 million and $34.9 million at September 30, 2025 and December 31, 2024, respectively. Our total balance of cash, cash equivalents, restricted cash and marketable securities increased by $15.2 million from December 31, 2024 to September 30, 2025.

Current wording

We had cash and cash equivalents and restricted cash of $298.5 million and $99.0 million as of March 31, 2026 and December 31, 2025, respectively. In addition, we had marketable securities of $34.4 million and $34.9 million at March 31, 2026 and December 31, 2025, respectively. Our total balance of cash, cash equivalents, restricted cash and marketable securities increased by $199.0 million from December 31, 2025 to March 31, 2026.

Previous wording

For the nine months ended September 30, 2025, our principal sources of liquidity included the draw of $20 million on our LOC and cash collected from customers. We believe our existing sources of liquidity will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months. Our future capital requirements may vary materially from period to period and will depend on many factors, including the timing and extent of spending on research and development efforts, the expansion of sales and marketing activities, the continuing market acceptance of our products and ongoing investments to support the growth of our business. We may in the future enter into arrangements to acquire or invest in complementary businesses, services, technologies and intellectual property rights. From time to time, we may explore additional financing sources which could include equity, equity‑linked and debt financing arrangements.

Current wording

For the three months ended March 31, 2026, our principal sources of liquidity was from our public offering and cash collected from customers. We believe our existing sources of liquidity will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months. Our future capital requirements may vary materially from period to period and will depend on many factors, including the timing and extent of spending on research and development efforts, the expansion of sales and marketing activities, the continuing market acceptance of our products and ongoing investments to support the growth of our business. We may in the future enter into arrangements to acquire or invest in complementary businesses, services, technologies and intellectual property rights. From time to time, we may explore additional financing sources which could include equity, equity‑linked and debt financing arrangements.

Previous wording

During the nine months ended September 30, 2025, net cash provided by operating activities was $3.8 million, which was the result of an $18.6 million net loss and cash used in net working capital of $10.7 million, offset by non-cash expenses totaling $33.1 million related primarily to depreciation, amortization, and stock-based compensation. The cash used in net working capital in the nine months ended September 30, 2025 was driven by a $10.2 million increase in inventory, a $13.2 million increase in accounts receivable and a $1.2 million decrease in deferred revenues. These uses of cash were offset by a $1.9 million increase in accounts payable, a $5.8 million increase in accrued and other long-term liabilities, a $5.9 million decrease in prepaid expense and other assets, net and a $0.9 million decrease in lease liabilities.

Current wording

During the three months ended March 31, 2026, net cash provided by operating activities was $9.7 million, which was the result of $0.6 million net income and non-cash expenses totaling $15.1 million related primarily to depreciation, amortization, and stock-based compensation, offset by cash used in net working capital of $6.0 million. The cash used in net working capital in the three months ended March 31, 2026 was driven by $8.2 million increase in prepaid expenses and other current assets, $2.5 million decrease in accrued and other long-term liabilities, $1.6 million decrease in accounts payable, and $0.6 million decrease in lease liabilities. The uses of cash were offset by a $2.7 million decrease in accounts receivable, $2.6 million increase in deferred revenues, $1.3 million decrease in inventory, and $0.2 million decrease in other assets, net.

Previous wording

During the nine months ended September 30, 2025, net cash used in investing activities was $7.3 million, which was driven by the net purchase of marketable securities of $0.3 million and net capital expenditures of $7.0 million.

Current wording

During the three months ended March 31, 2026, net cash used in investing activities was $1.4 million, which was driven by net capital expenditures of $2.1 million, offset by the net proceeds from maturities and sales of marketable securities of $0.7 million.

Previous wording

During the nine months ended September 30, 2025, net cash provided by financing activities was $18.5 million, which consisted of a draw of $20.0 million from our LOC and proceeds from stock option exercises and employee stock plan purchases of $1.6 million, partially offset by taxes paid on the net settlement of stock awards of $3.1 million.

Current wording

During the three months ended March 31, 2026, net cash provided by financing activities was $191.2 million, which consisted of proceeds from our public offering, net of underwriting discounts and offering costs, of $191.3 million and proceeds from stock option exercises of $0.2 million, offset by tax payments related to stock award issuances of $0.2 million.

Previous wording

We have a $40.0 million revolving LOC with Banc of California dated September 24, 2018, which is secured by our assets and matures on September 24, 2027. The LOC agreement contains restrictive and financial covenants, including a minimum total cash covenant, and bears an unused credit fee of 0.25% on an annualized basis. The interest rate of 6.25% on the LOC at September 30, 2025 is based on the Prime Rate, minus a margin based on our liquidity levels.

Current wording

We have a $40.0 million revolving LOC with Banc of California dated September 24, 2018, which is secured by our assets and matures on September 24, 2027. The LOC agreement contains restrictive and financial covenants, including a minimum total cash covenant, and bears an unused credit fee of 0.25% on an annualized basis. The interest rate of 5.75% on the LOC at March 31, 2026 is based on the Prime Rate, minus a margin based on our liquidity levels.

Previous wording

During the nine months ended September 30, 2025, we drew $20.0 million under the LOC to support working capital and general corporate purposes. As of September 30, 2025, $20.0 million was outstanding on the LOC and we were in compliance with all covenants. The remaining $20.0 million unused portion of the LOC is available for borrowing.

Current wording

As of March 31, 2026, $20.0 million was outstanding on the LOC and we were in compliance with all covenants. The remaining $20.0 million unused portion of the LOC is available for borrowing.

Previous wording

Other than the draw of $20.0 million on our LOC, there have been no material changes to our contractual obligations as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.

Current wording

There have been no material changes to our contractual obligations as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.